Broadband funding is ‘wildly insufficient’

sion behind us, I’d like to take this opportunity to update you on the outcome of our broadband discussions at the State Capitol.

As you likely know, $35 million in state funding was dedicated to the next round of our successful border-to-border broadband competitive grant fund. In its first two rounds of funding, the program has awarded funds totaling approximately $30 million - which has extended critical connectivity to roughly 10,000 homes, 1,000 businesses, and hundreds of community anchor institutions such as schools, libraries, and hospitals.

Unfortunately, though, this level of funding is wildly insufficient to meeting the needs of unserved and underserved areas across Minnesota. After all, the Governor’s Broadband Task Force estimates a ‘broadband infrastructure gap’ approaching $3 billion. 

To fill the gap, the same task force called for $200 million in additional grant funding in 2016; the Governor proposed $100 million; and the Senate committed $85 million. For its part, the House budgeted only $25 million for the fund and refused to devote substantially more resources to it during budget negotiations.

Related negotiations also resulted in some changes to state speed goals, eligibility thresholds and the policy driving the grant fund.

Per task force recommendations, state speed goals were updated to call for 25/3 mbps service to all homes and businesses by 2022, and 100/20 service availability to all homes and businesses by 2026. In addition, by 2022 Minnesota aims to rank among: the top five states for broadband speed universally accessible to residents and businesses; the top five states for broadband access; and the top 15 when compared to countries globally for broadband penetration.

As for grant fund eligibility, the threshold for unserved remains linked to the FCC definition of broadband - currently 25/3 mbps service. The threshold for underserved was updated to include those areas falling short of the 100/20 mbps speed goal. Importantly, up to $5 million of 2016 funding can be utilized for projects in these underserved areas - areas poised to leverage state broadband funding for increased economic development and job creation.

Changes in policy were adopted for two overarching reasons: first, to maximize the impact of our lower-than-expected $35 million in state funding; and, second, to encourage those Minnesota providers qualifying for federal Connect American Fund (CAF II) dollars to invest in technology and service suitable for bandwidth needs of today and tomorrow.

Specifically, these policy changes include:

o Expanded eligibility to include up to $5 million in funding for projects in newly-defined underserved areas (those areas falling short of 100/20 mbps service); this will help maximize the number of homes and businesses served by the $35 million appropriation and increase economic development return on investment

o Letter of intent and formalized incumbent challenge process that allows incumbent providers to pledge new investments that meets state speed goals in applicant areas; ideally, this promotes efficiency and alignment in use of public and private funds for robust infrastructure investment

o Exemption from prevailing wage requirements for last mile broadband infrastructure; this addresses consistent feedback from rural providers for whom existing prevailing wage regulations created unintended consequences and disparities in compensation

In addition, DEED’s Office of Broadband Development will be publishing more information regarding the application criteria and results, as well as updated annual mapping data.

As much as we may be disappointed by the level of funding and, perhaps, some of the new policy requirements, we shouldn’t lose sight of the big picture: in the past few years we’ve teamed to create a credible and effective Office of Broadband Development and a competitive grant fund that is producing real results for Minnesotans. 

Stakeholders will be given an opportunity to determine whether this legislature is taking our broadband connectivity challenges seriously, and the next legislature can and should build toward a significant and sustained commitment to our broadband grant fund, as well as reconsideration of whether policy changes have produced the intended result of targeting scarce resources and maximizing benefits of federal CAF II dollars.

Although I expect the Office of Broadband Development will be providing additional information regarding the 2016 application process, don’t hesitate to contact me with any questions or concerns regarding the recent broadband discussion at the State Capitol. 

And don’t forget to get your applications in. Wisely or not, some legislators continue to focus on the level of unfunded applications as a proxy for interest and need. As such, your application means a lot and can result in significant project funding, an investment and service commitment from an incumbent provider, or a clear demonstration of interest and need for future funds.

Sen. Schmit can be reached at sen.matt.schmit@senate.mn or 651-296-4264.